Thinking of starting a new business?

Starting a new business can be an exciting, but daunting process. There are a number of areas that need to be considered at an early stage, including deciding on the appropriate structure for the business.

Many small businesses start off as sole traders, however it may be beneficial to start as a partnership, limited company or limited liability partnership. The appropriate structure willdepend on the size of the business, involvement of others, tax and VAT issues, financing requirements, personal liability, retirement plans and many other related matters.

There is a common myth that where individuals trade through limited companies, they pay no tax. Whilst individuals can currently withdraw up to £5,000 per year in dividends from a company tax free, any dividends drawn above this will be taxable at 7.5% for basic rate taxpayers of 32.5% for higher rate taxpayers. The company will then also pay corporation tax on profits at 20%, which is the same rate currently as income tax for basic rate taxpayers.

A good accountant will be able to gain an understanding of the business and its owners by asking the relevant questions, listening to the responses and recommending the best way forward. Seeking the appropriate advice at an early stage will be a worthwhile investment, ensuring things are set up correctly from the start. Failure to do this may prove costly and time consuming in the long run.

Lentells Ltd Chartered Certified Accountants

Registered as auditors and regulated for a range of investment business activities in the United Kingdom by the Association of Chartered Certified Accountants. Licensed by the Institute of Chartered Accountants in England and Wales to carry out the reserved legal activity of non-contentious probate in England and Wales.

This company is not authorised under the Financial Services & Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services to clients because we are regulated by the Association of Chartered Certified Accountants. We can provide these investment services if they are an incidental part of the professional service we have been engaged to provide.